One year ago, we launched the Loup Frontier Tech Index to track the performance of publicly-traded companies that influence the future of technology including AI, robotics, autonomous vehicles, computer perception, and virtual and augmented reality.
- The bad news: LFTI has underperformed the Nasdaq since inception (7/25/18). The index is down 1% while the Nasdaq is up 5%.
- This is largely a reflection of how well mega-caps have performed, which aren’t in the index. The index is built to track the performance of companies with more direct exposure to the frontier tech themes around AI, robotics, AVs, AR/VR.
- The good news: the index has outperformed other similar indexes including BOTZ, ROBO, and ARKQ by 100-600 bps.
- We believe LFTI will continue to perform better because it is growth-weighted and frontier tech is all about growth.
1-yr performance comparison
As of market close 7/25/19 (one-year since inception):
- LFTI -0.8%
- ROBO -3.9%
- BOTZ -8.9%
- NASDAQ +5.1%
Since launch, the Loup Frontier Tech Index has tracked higher than other AI/robotics focused products like ROBO and BOTZ. We believe our overweighting on the fastest growing companies in the space is more representative of opportunity spaces in frontier tech. Tech investors will always favor growth because growth is a symbol of the adoption of new technology. Stagnation is a sign that a technology isn’t working.
Mega-cap Market Bias Hides Frontier Promise
While the performance of the index has been favorable relative to its closest comps, the broader market has outpaced the index because of the continued flows into mega-cap tech stocks. Our index caps constituents at a $250 billion market cap, still mega-cap, but excludes some of the best performers over the past year like AAPL, AMZN, FB, NFLX, etc. We expect the mega-cap tech companies to continue to perform well in part because they are some of the leading companies driving frontier technologies like AI, robotics, and autonomous vehicles forward. However, it’s hard to get a direct view of the progress of frontier tech from a market perspective because those companies are so large. We view the Loup Frontier Tech Index as a way to more purely track those themes.
How to Invest in LFTI
We’ve licensed the index to Innovator Capital Management as the basis for the Innovator Loup Frontier Tech ETF on the NYSE Arca under ticker LOUP. You can find more information on this product and how to invest through Innovator Capital Management.
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